Tech giants form LOT Network patent alliance

The LOT Network offers companies protection against actively used patents being transferred to patent trolls, also known as patent assertion entities.

A group of high-tech companies have joined forces in a patent cross-licensing coalition dubbed the LOT (License on Transfer) Network, in the hopes of reducing the impact a patent troll can have.

Since the birth of patents, which describe a particular method or methods of achieving something and prevent competitors from using said method for a length of time, there have been patent trolls. These are companies that file or acquire patents with no intention of ever using the detailed technology, but instead wait for someone else to strike it big before hitting them with a lawsuit claiming patent infringement and demanding a cut of the proceeds.

In recent years companies including Eolas Technologies, Opti and Implicit Networks have become infamous for aggressively attacking technology companies based on claims of patent infringement. Although they themselves like to use terms like 'intellectual property rights management firm,' their detractors say they are patent trolls - and an attack by a given troll can cost millions, which stifles innovation and can result in technologies going unused.

The LOT Network is one attempt at an answer to the patent troll problem. Founded by a group of seven technology companies including SAP, Google, Newegg, DropBox and Canon, the group looks to de-fang so-called 'patent assertion entities' by agreeing a cross-licensing deal that will prevent used patents from being acquired by PAEs. The system works by triggering the agreement when a patent is transferred outside the LOT Network membership pool, at which point all members receive a licence to use the patents without having to pay the PAE. If a member company gets acquired outright, or turns into a PAE itself, the remaining members get rights to the entire patent portfolio.

Membership of the LOT Network costs between $1,500 and $20,000 a year depending on the participant's annual revenue, but compared to the cost of a lawsuit it's likely that member companies will consider that something of a bargain.